Each tool is complimentary to one another. Think of it like a pyramid:

1- KingSumo helps you to grow your business with giveaways
2- Sumo.com (our core product) gives you all the marketing tools
3- AppSumo and BriefcaseHQ provides you with deals on the rest of the tools you'll need in business

Don't worry about getting new customers. Existing customers are so much easier to market , so build complimentary products for your existing customers.

Think about your favorite author. Do you own more than 1 book of theirs? I'd bet 1 million percent you do. Why is that?

I do this too, and it's because we like their stuff and want MORE from them. Think about that with your business: keep giving MORE of what the people already want INSTEAD of starting new businesses, trying totally different categories, or focusing all your attention elsewhere.

Imagine you're a guitar teacher and want to grow that business:

Step 1: Teach a student in-person. Make some money, but quickly realize it doesn't scale

Step 2: Go on Teachable and make a course multiple people can take

Step 3: Then you can sell software that does audio tuning. Even more scale

Step 4: Then you can sell your own guitar

Make your current customers happier

People are always looking for the next marketing channel or tactic to grow their business and get in front of new customers.

What very few entrepreneurs realize, though, is that it's much easier to grow your business through your current customers than it is to go out and find a whole bunch of new customers.

Challenge: How would you 2x your business if you COULD NOT get any new customers?

This will help you think of ways you can over-serve your current customers.

They key is to keep over-delivering and make your current customers as happy as possible. The benefits of this are two-fold:

Happy customers will refer your business to their friends

Happy customers are more likely to spend more cash and buy your new products or services

3. Create recurring revenue

The greatest thing about recurring revenue is predictability. When you know how many customers you have on recurring plans, you can begin to hire, spend money, and grow your business confidently.

At AppSumo we've had months where we made $50,000... and months where we've made $500,000. Both sound great until you realize our monthly expenses are at least $300,000. With AppSumo (and KingSumo), we do make money right away, but these customers might not return anytime soon.

But remember: don't force a recurring revenue model just because you have Scrooge McDuck fantasies of constant passive income. It should be something people WANT to pay for monthly. In other words, it makes sense for them to pay monthly instead of one-off. For our business, recurring revenue comes from our Sumo website tools.

The downside is, recurring revenue comes with a bunch of challenges (like churn). It's not just as simple as setting up a monthly subscription for your customers and leaving it.

4. Find the right pricing structure

Pricing is an incredibly important part of your business.

I can't tell you exactly what'll work for your business, but I can help you get started by sharing how we figured out our pricing at Sumo.

Then we made each individual app $20 month and added pro options for each of them.

Next we saw people wanted all our email apps and not have to figure which one to buy so we bundled them.

From there we thought why not offer all the apps for 1 price, hello Sumo Pro.

Fast forward today MOST of Sumo is free except the benefits we identified that 80% of customers REALLY value.

One interesting thing, is notice what people REALLY value. We thought everyone would pay to remove our branding. Surprise, NO ONE CARED!

To improve our pricing, we analyzed:

The tools people specifically bought

Which type of customers churned the least

The revenue vs cost of different customer segments

We realized had three types of customers: Wantrepreneurs, businesses, and enterprise companies.

Tiny businesses had no money and large businesses needed a lot more customization and expected account management.

Medium businesses, however, had money to spend with us and got the most value from our product. We began to focus on medium sized businesses and reflected the value we deliver to them in our pricing.

Align your pricing with value

Your pricing should align with the value customers get out of your product.

At Sumo, this meant increasing our prices. By raising our prices we were able to deliver new, highly requested features and provide better support.

This doesn't mean you should just sit back and increase your pricing for the sake of it.

Look at your business:

Which customers do you want to serve the most?

Which customers are happiest?

Which have the highest LTV?

These are the customers you're creating value for. Understand the VALUE they get from your product and align that to the price you charge them.

I recently spoke with Basecamp founder, Jason Fried. He explained a little on how Basecamp are experimenting with pricing for "The Basecamp Way To Work" workshops.

Prices started at $100 per ticket. Now they're selling at $500 - 5x the original price! And they still sell out in 24hrs. By experimenting Jason is able to figure out how much value they deliver to attendees and what price people are willing to pay.

5. Set up simple frameworks

With AppSumo we have a very simple framework for deals. Every month we offer four paid deals.

With our content at Sumo.com we have a framework, too. Sean and Sarah produce four articles per month. I love the number 4 (and this is point 4… coincidence???)

Frameworks make growth and scaling very predictable.

In your business, how you can break down some core processes into frameworks that make it super simple for anyone on the team to pick up. Scale in your business is enabled through 2 options:

More people

Automating things with software

You might have a sales team, but when you have a new product launch, how can you ensure everyone in the company can easily manage the sales process? You guessed it...a framework!

I HIGHLY encourage you to create a Standard Operating Procedure (SOP) for EVERY position in your company. Think of it this way, if you were to hire 10x more people for the role how soon could they onboard to the position. Alternatively, if one of your people get sick or injured how would other people know what responsibilities are necessary to do.

This should be a living document that everyone has access to.

Here's an example of one from my personal SOP.

The ideal is that anyone can pick up the SOP and learn the job near instantly.

6. Focus on your sweet spot

All of us are really good at something.

To scale your company, you need to put your players in the right positions to win. In basketball, you don't see a Point Guard playing as a Center.

You need to make sure you have all your team in the right positions. Including yourself.

Anton on our team is great at sales but we noticed he's a better coach. So we hired a sales team under him so he can be Coach Potato.

Personally, I LOVE marketing and creating content to share it. But for 2 years I spent 85% of my time recruiting for Sumo. It was necessary.

One morning I reflected what my sweet spot has been historically. And I remembered 2014 was my happiest professional time partly because I was working on this blog and marketing it. I love promoting great things. Back to OkDork for me and our new Recruiter gets to do what she loves!

Go to your sweet spot and hire the people who's sweet spot is what you need help with.

7. Hiring is everything

No company thinks it hires bad people.

Every single CEO I meet always says "I only hire A+ players." But most of the time they're kidding themselves. The fact is most teams suck.

Hiring is everything. The only difference between shitty and successful companies is the people.

Look at Elon Musk, he's crazy smart. But he didn't build the spaceships or cars himself. He found the best people in the world and did whatever it took to hire them.

People make all the difference in business. People turn ideas into successful companies.

Hire people better than you

To be successful, you have to hire people better than you.

We hired Ayman to grow AppSumo. A little over 2 years later AppSumo is the biggest it's ever been and I talk with Ayman at most 15 minutes a week. Don't get me wrong, I want to talk and help him wherever he needs it, but he's better than me at running AppSumo. And I'm a better advisor to him.

You know you've found the right person when they come on-board and your life is instantly better.

As you scale, it gets hard not to compromise. If you compromise, your team of A+ players can soon become C players and your team will get weaker, not stronger. I'll repeat cause it's SO important, don't-ever-never settle on any hire. Ever!

Every hire should level up your business. No compromises.

8. Do more of what's working

I've noticed a LOT of people, myself included, are always looking for the next thing.

At Sumo, content marketing works for us. But we've spent SO much time, energy and cold, hard cash on trying to make ads work.

Instead, we should have doubled down on content and 2, 3, 4x'd our output to maximize on the opportunity. (We are doing this now and have doubled the content team)

When something works do more of it.

At the same, you need to aggressively cut the things that aren't working.

There's nothing wrong with experimenting and trying new channels. But you need to know when to stop. Be ruthless.

This happened with our Instagram account. We currently have 100k+ followers and have made many attempts to convert those people into customers. And we've made a grand total of $0. I'm not kidding. Now we're not going to spend ANY more on it. Be merciless in your cutting.

9. List all of your problems

This is easily one of the most rewarding exercises I've done at Sumo. List out all the problems you face in your business. Stuff that could really screw you up.

For Sumo, this included:

Churn is higher than we'd like.

How can we differentiate our product from competitors?

Which marketing channels can we actually invest more in?

How can we scale the sales revenue faster?

Once you've listed all your problems then brainstorm three solutions for every single issue.

Next, I take this to the team at Sumo and we prioritize the issues we feel might hurt us most. This really helps us frame what we need to do to grow our business, plus how we can combat our biggest challenges before they arise.

Zuckerberg said it right, "you have to cannibalize yourself before someone else does."

10. You need more people

I haven't always felt this way, though. I used to look at Facebook and think "why do they need 15,000 people to run that company?"

Like seriously, what is everyone doing all day?

There's a reason that many successful companies have a large number of employees. You can't get done at scale what you want to do with the same amount of people.

Look at the companies in the position you want to be, then model the org charts and types of hiring they are doing. Scale your team to scale your growth.

Top tip: Uncover your competitors org charts

Here's an incredible LinkedIn hack to learn who you should hire.

Almost every company has a public LinkedIn page where you can see who works there and their job titles. From this information, you can begin to work out what their org chart looks like and how they've structured their team.

This isn't the exact blueprint for how to build your company, but it gives you insights on roles you should be hiring to grow your team.

In addition, go talk to someone at their company to understand why they've hired certain positions or roles. Save yourself the time and money, these people have already figured it out. I learned from Jason Cohen at WPEngine who has scaled to 400+ people.

11. Iterate the way you communicate

Communication is the single biggest challenge I DID NOT expected as our business scaled.

Now that the company is bigger I can no longer gauge everyone's performance or directly lead everyone on the team.

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38 responses to “What I Learned Growing an 8-Figure Business”

Pim

September 26, 2017 at 1:22 am

Someone should give this guy a medal ?

What an awesome peace of content, again...

I consume Noah’s content for the past 3 years now and I grew my company to 6 figures per year because of it. I started to repeat reading, listening and watching his stuff to understand much better what it’s about, to get the most value out of it and to really become the results and to live the methodologies.

I’m currently trying to figure out our One Metric That Matters (OMTM) as a Marketing and web development agency that works with hour retainers. Any suggestions are welcome ?

Packed to the brim with value. You're the man. Definitely using your weekly updates doc going forward in my business with the team. Wanted one of these for a while to go along with our weekly team meeting but yours is perfect and simple. Thank you.

I've been reading this for 3 days now. No, I'm not a slow reader, I just didn't want to read it all at once, as I thought I would miss important points as I always hurry doing stuff. thank you for this.

Hey Noah,
Thanks for this amazing post. How did you find/hire someone like Ayman? How did it happen? I am more someone who builds, I love selling too but I think I am not that good at it.
Many thanks!
Flo

Nice info Noah, I like the idea of anonymous feedback and the way the inputs of team are considered, as team is everything like leg and arm and every vital organ of the body for the successful functioning of the business.

This is an outstanding post and resource, thanks Noah. How you summed everything up at the end with those 4 key points is now etched in my memory. It's easy to get caught up in the minutiae and forget the power of the right people in the right roles

Another way to build out a company's org chart is to search for the companies name on Indeed and see what roles are not represented on Linkedin. An added bonus is being able to see who may be looking to jump ship!

Re: 6, I've certainly been waaaay too much of a control freak in the past, but I think it's unavoidable to some extent: I don't think you can hire people if you haven't done the job before (however crappily). Definitely feels good to go back to things where you're a natural.

Hope you get back closer to that sweet spot and write more of that good stuff!

I see in your spreadsheet that you have Reddit Ads as one of your marketing channels. Can you expand on your tactics/ methods there? It's my understanding that Reddit users hate being marketed too and will eat you alive.

One of my own problems is having to many competing goals - I'm starting to notice I'm not doing as good as I could in each area because I'm simply not focusing 100% on one thing. What would your advice be on this?

Great post! Thanks for sharing the details with aspiring entrepreneurs like me. I have created an app for short stories with a recurring revenue model and so far have 88 subscribers in 3 months paying on an average of $8-10 a month. Retention, as you mentioned is a big problem. However I am keen to scale but its challenging without a big marketing budget.